With the IFoAs strategy review imminent, Derek Cribb provides some background on the current actuarial landscape
Following great efforts from volunteers and the Executive, in June the IFoA's Council will review final drafts of the refreshed IFoA strategy. We will start promoting details of it within the next few months, so I'll take the opportunity now to talk a little about some of the background, the 'state of the actuarial nation', and how it has changed.
Student numbers in mature markets, such as the UK or US, have been broadly flat for the past three years. When compared with the demand in emerging markets, we see IFoA student growth of around 10%. This has led to a position where an ever-growing 59% of our students are now based outside the UK. At a more granular level, it will be no surprise that student numbers in pensions are in decline. Life insurance is still a growth area in markets such as Africa and South-East Asia, having levelled out in South Asia and China.
Of the 'big three' practice areas, general insurance is the only one growing in all regions, though far more aggressively in non-UK markets. In smaller practice areas, we are seeing worrying declines in investment management, yet double-digit growth in risk management globally and in health in non-UK markets.
Emerging markets continue to open up, though in many cases there are few, or no, actuaries within the country. Commonly, for reserving and company accounts, the regulators will rightly insist on a qualified actuary, usually from a reputable actuarial qualifying body. However, in many developing countries, insurance products are priced off a tariff. The inflexibility of pricing means that many are excluded from purchasing fairly priced insurance products.
Increasingly, there is flexibility in what regulators accept as suitable levels of qualification. The Certified Actuarial Analyst will often be a higher level of qualification than currently required, and sets a 'standard' supported by the World Bank that may help capacity issues. We are seeing technical level analytical work being done by those for whom qualification as an actuary is not a real goal.
For example, within UK pensions, we have seen the creation of more non-UK back offices, with some organisations no longer recruiting UK students on the Fellowship. Within insurance, the actuarial function is part of a wider team that can include IT and data analysts. In this context, we can see more opportunities for members qualified at the appropriate level, though often not as an actuary. The overlap into data analytics and IT is a clear opportunity, with scope to develop accreditation based around our core qualifications. Growth in non-core areas may benefit from a more collaborative approach with other organisations, whether in risk management, big data or broader financial fields.
Technology is accelerating business change. Threats and opportunities will not only crystalise more rapidly but can also disappear at a similar pace. Other professionals will seek to expand into common areas. The quality of our members, their education and business relevance is therefore key to the longevity of the profession.
Internationally, we have stronger and more productive relationships with other actuarial bodies. We have increased the number of exemption agreements with world-leading universities, engaged more with regulators and finance ministries in many of our priority regions, and have a far greater understanding of where the varying levels of actuarial skills are most needed. Testament to the stronger international profile is the unprecedented number of non-UK members on Council, and indeed the presidential team.
Our reputation has moved onwards and upwards over recent years. The IFoA's regulatory capability has matured, highlighted by a strong relationship in the UK with the Financial Reporting Council (see our feature).
The reputation of actuaries as ethical, regulated professionals is possibly at its highest for many years, though, with widening roles for our members, there is potentially a greater risk to maintaining this. The IFoA is sought out not just to respond to consultations but also to help frame them. We are increasingly invited to join the working groups of our key stakeholders, and are more responsive and consistent in our external engagement.
Our surveys suggest that the IFoA should leverage its reputation as an independent and expert organisation to take stronger positions than it currently does, in the public interest.
It would be wrong to suggest that we have moved on while others have stayed still. The global landscape of the profession changes continuously, and our strategy must adapt to ensure our sustainability. I look forward to discussing the new strategy with many of you at events over the coming months.
Derek Cribb is the chief executive of the Institute and Faculty of Actuaries